New French Tax Disorganises Copra Market

COPRA, during the last four weeks, has fallen in value to levels never before recorded, and the con dition of the market now can only be described as calamitous. The table of figures published on page 45, compiled from the London quo tations printed in “The Sydney Morning Herald” every Monday, shows what has happened since January, 1931—two or three collapses to about £10 per ton, with corresponding recoveries to about £14, and then, since mid-August, a startling fail.

The London price, since March last, had been dragging around £10/10/- per ton (sterling), which returned a bare margin of profit to growers. Writing last month, we said that the position was the worst in the history of the industry; but that coconut growers might at least take comfort in the fact that the market had reached “absolute bot

tom”—and that, as the position could not be worse, it might con ceivably get better. But it is worse.

A new, unexpected factor has come into the situation; the price has fallen still further, to around £9 per ton, and the position of the copra producer now is tragic indeed.

The new factor is the aggressive nationalism of France. The French Government quite suddenly has im posed an import duty of about 35/per ton on all copra entering that country, with the result that the European market has been com pletely disorganised and partially paralysed. We have very few de tails of this new development. On two or three occasions, a few months ago, our Tahiti correspon dent said that the French Govern ment was contemplating some action of the sort, with a view to giving a special preference, or pay ing a special bonus, to producers of

copra in French territories; but no one appeared to think that such a step was seriously contemplated, and no notice was taken.

About the second week in Au gust, the European market became more seriously disorganised, and it was announced that there was prac tically no sale at all for smoke cured copra. Then came a bald statement of a dozen words, simply saying that the new French tax had paralysed the Marseilles market, to which is sent most of the smoked copra from the South Seas. That is about all that is known at the moment of writing; but it is pos sible to outline fairly clearly what has happened. Our unfortunate copra-growers have been caught in the seething whirplool of inter national hates and jealousies.

France, in pursuance of her savagely retaliatory fiscal policy, has determined to employ against

the British Empire the weapon that is given to her in the fact that about one-fifth of the world’s copra pro duction is marketed in Marseilles.

France remains on the gold standard; Great Britain’s currency is some 20 per cent, under gold; the currencies of Australia and New Zealand are 25 per cent, and of Fiji 10 per cent, under sterling, and 45 per cent, and 30 per cent, respec tively under gold. That, obviously, has given British Empire copra growers a corresponding exchange advantage over French planters.

France is the leader of the gold bloc, and is deeply resentful of the exchange premium enjoyed by British exporters—in fact, if one thing more than another wrecked the World Economic Conference, and plunged the world into this disastrous era of aggressive nation alism, it was the determination of the French financiers to protect and maintain the gold standard, at all costs. France, in pursuance of her fiscal policy, is extremely sensitive on the matter of tariffs; and, if she resented Britain’s abandonment of free-trade and of the gold standard, she resented even more the British Imperial sentiment to which ex pression was given at Ottawa.

Therefore, this copra duty, while disconcerting in the extreme, is logical enough from the French man’s point of view, and should not have been unexpected.

To understand what has hap pened, it is necessary to glance at figures showing world production and distribution of copra. The fol lowing data are taken from the an nual compilations of London oil seed merchants, and from British Colonial office reports.

Copra Production In 1932.

It is to be noted that the London merchants’ compilations, for some reason, do not include the copra shipments from the South Seas; and, therefore, we turn for these figures to the Colonial Office reports for 1930—the latest complete year available. Production in the South Seas has shrunk somewhat since 1930, but the figures will serve for present purposes.

Approximate Copra Production

In South Seas, 1930.

An examination of the statistics available indicates that, during the last two years, the world’s copra has been disposed of about as fol lows :

The two most important Euro pean markets are in France and Germany. A few months ago, the new German Government, in pur suance of the Nazis’ national policy, reduced the importations of copra by about 40 per cent., and thus threw a corresponding quantity of the product on to other markets.

This affected the average price severely. About the same time, it became clear that the glut of cheap butter on the European market was sharply reducing the sale of mar garine, of which coconut oil is an important constituent; and the effect on the copra market was per ceptible. Now comes the virtual closing of the French market to all non-French copra.

Marseilles is the principal market for the lower grades of copra, par ticularly the smoke-cured product from the South Seas, Dutch East Indies and Malaya. Consequently, sun-dried and hot-air-dried grades are not so severely affected. But the disorganisation of the market, for all that, has caused a sharp, general decline of all prices. It was noticeable, immediately the French tax became operative (on August 11), that the difference between the smoke-dried and sun-dried quota tion, usually 5/- per ton, opened out to 25/- per ton; and it is still around 17/6 and 20/- per ton.

It is, on the part of France, a stupid, short-sighted policy, clearly dictated by prejudice rather than by expediency. It will cost France much valuable trade, and benefit her nationals little. The French colonies produce a very small pro portion of the world’s copra. Tahiti exports about 17,000 tons and New Hebrides 12,000 tons per annum.

About 18,000 tons of coconut oil are produced annually in Cochin China.

New Caledonia exports only a little copra.

What is going to happen now?

We have no details yet; but it may be taken as certain that there will be a strong protest made against this iniquitous tax, and that, if France does not free the market at Marseilles, the market will go else where. Much copra is milled in Southern France; but probably the larger portion of that which is sold at Marseilles is re-exported, to Italy, Austria, Spain and Czecho slovakia.

It may be, of course, that France will seek to justify her 35/- per ton impost by pointing to the fact that Britain, some 18 months ago, ap parently as part of the Ottawa understanding, placed a 10 per cent, duty on all non-British copra im ported into Britain. It was a nice gesture to the Empire’s copra-pro ducers, but it failed entirely in its purpose, as not one sixpenceworth of benefit was enjoyed by British planters or traders. Britain receives less than 10 per cent. (80,000 to 90,000 tons) of the world’s copra; and the Unilever Combine, which has complete control of the market, saw to it that only British copra entered Britain, while the non- British product was deflected to the Combine’s innumerable Continental mills. Mr. W. R. Carpenter, of Syd ney, discerned this development several months ago, and made formal protest to the Common wealth Government. He received, in reply, a typically official communi cation which apparently meant that no one understood the situation and no one had sufficient energy to trouble about it, anyway. The use less import duty has remained; and, quite possibly, it has contributed to the new French tax, which is likely to disastrously affect the copra in dustry within the Australian-Pacific zone.

(Concluded on page 6.)

Tons.

Philippines 134,061 Macassar 72,605 Malaya 183,900 Java 62,719 Other Dutch EJ 264,399 Ceylon 45,626 Total production from countries named 763,310

Tons.

New Guinea 60,000 Papua 12,000 New Hebrides 12,000 W. Samoa 12,000 20,000 Solomons 20,000 Tonga 14,000 Tahiti 17,000 Approx. total annual production, South Seas 167,000

To Great Britain 9 Per cent. ,, United States ... 27 ,, France 20 ,, Holland 7 ,, Germany 14 ,, Czechoslovakia 2 ,, Norway 3 ,, Denmark 8 ,, Austria 1 ,, Italy 3 ,, Spain 6

A section of copra-producers who probably will be hard hit are the Dutch. Much copra from the East Indies goes to Marseilles. The British producers at least have the exchange premium as a set-off against the new tax; but the Dutch, who so far have adhered steadily to the gold standard, have no such protection.

It is to be hoped that Australian copra interests will lose no time in dealing with the position in a broad, general way. Clearly, it is one that calls for the attention of the British Government. It may be that if the useless British import duty were re moved, France would make a simi lar concession. Or, if not, it might be wise to remove the British tax, anyway, and give the copra indus try a chance to re-establish, in Lon don, the market and distributing centre which the French are likely to drive away from Marseilles.

Whatever is done should be done quickly. With the latest disorgan isation of the market, the South Sea copra-growers face a very black horizon. They all were hanging on, very courageously, in the belief that the position could not get worse.

Now, it definitely is worse.